Brexit breakthrough on expatriates’ rights

A landmark agreement has been reached in Brexit talks which has bolstered citizens’ rights on both sides and moved negotiations onto the next phase.

Prime Minister Theresa May and European Commission President Jean-Claude Juncker's joint “progress report” published on 8th December outlines the key areas of agreement on the three priority issues – citizens’ rights, the Irish border and financial settlement.

The key for UK nationals living abroad is that it preserves the rights of residence locally in EU countries. However, this only applies for existing residents before Brexit, so if you wish to remain but have not yet applied for permanent residency, it is important that you do so to secure these rights.

Where do we now stand with citizens’ rights and the other key Brexit issues?

The right to remain

Both sides have formally agreed to maintain existing rights for EU nationals settled in the UK and Britons in the EU. “Today, we bring back the certainty” said Juncker. For Britons resident in the EU today – or who gain permanent residency before Brexit takes place – this means that your right to remain should be guaranteed. This also extends to partners and direct family members, even after the Brexit date. You would, however, lose your permanent residency status if you spend a period of five consecutive years away from that country. Britain’s request for onward freedom of movement – enabling Britons to freely move between EU countries – has been deferred to future negotiations.

While the cut-off point to lock-in the right to remain is set for the date Britain leaves the EU on 29th March 2019, it is unclear if any transition period could extend this further.

So if you are spending considerable time in an EU country such as Portugal, France, Spain, Cyprus or Malta and would like the freedom to continue doing so post-Brexit, consider taking steps to secure your permanent residency now. Similarly, if you are thinking about relocating, now is the time to take action, before the rules change. Beyond Brexit, the precise requirements, length of time and expense required to acquire permanent residency are uncertain.

Access to healthcare

The UK and the EU27 have committed to continue existing healthcare entitlements after Brexit. This means that:

Expatriate healthcare costs will continue to be fully or partially reimbursed by the NHS

The Form S1 system will carry on providing free cover for British pensioners and those receiving certain long-term benefits

Holders of the European Health Insurance Card (EHIC) remain eligible for free or reduced healthcare when visiting another EU country

While this is reassuring, you may prefer to secure peace of mind by lining up comprehensive private health insurance for your family.

Legal protection

A previous sticking point was how citizens’ rights are enforced by law. As well as freedom of movement and residence, rights include access to healthcare, education and social security benefits, and also employment issues like working conditions.

While the EU27 maintained that citizens’ rights must be protected outside national jurisdictions through the European Court of Justice (ECJ), Theresa May insisted on sovereignty for British courts.

Mrs May still demands that EU citizens living in the UK have their rights “enshrined in UK law and enforced by British courts”. However, she has now agreed to allow an eight-year oversight role for the ECJ up to March 2027 where cases are unclear. This compromise was a significant factor in securing agreement with the EU27. For UK expatriates, it represents more scope to invoke British legal protection while living in the EU.

The divorce bill

Initially, Prime Minister Theresa May offered to pay around €20 billion up to 2020, falling short of the EU’s expectations. However, in late November, she agreed to fully honour Britain’s financial commitments – estimated at around €40-60 billion – to secure the go-ahead from the EU27.

The Irish border

The Prime Minister has now presented a solution to satisfy the key players regarding this problematic issue. She promised no hard border between Northern Ireland and the Republic while confirming that the whole of the UK, including Northern Ireland, will leave the customs union.

What happens next?

Following the EU summit on 14th-15th December, the EU27 formally agreed that “sufficient progress” has been made to trigger the next phase of Brexit talks. Next planned steps are discussing a transition period in the new year before tackling the future trade relationship, tabled for March 2018. But there is still much to agree.

If you are a permanent resident in an EU country before Brexit, you and your family should have the right to stay permanently and continue accessing the healthcare benefits you do today. Your tax treatment should also stay the same and, as things stand, you can still transfer your UK pensions without penalties.

However, you could benefit from reviewing your financial planning and exploring your options before any changes take place. A locally-based adviser with cross-border expertise can help you secure financial peace of mind and prepare for Brexit developments that might affect you.

Blevins Franks accepts no liability for any loss resulting from any action or inaction or omission as a result of reading this information, which is general in nature and not specific to your circumstances. All advice received from any Blevins Franks firm is personalised and provided in writing. This document, however, should not be construed as providing any personalised taxation and / or investment advice. All information contained in this document is based on Blevins Franks’ understanding of legislation and taxation practice, in the UK and overseas at the time of writing; this may change in the future.

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